- Employer of Record (EOR):
- EOR acts as the legal employer for your international employees. When you hire employees in a foreign country through an EOR, the EOR takes on responsibilities such as payroll processing, tax withholding, benefits administration, and compliance with local labor laws and regulations.
- EOR services are typically used when a company wants to quickly and compliantly hire employees in a new country without setting up their own legal entity. It offers a flexible solution for businesses looking to expand globally without the administrative burdens of establishing local entities.
- Professional Employer Organization (PEO):
- PEOs also provide comprehensive HR solutions for businesses, but they operate differently from EORs. When you partner with a PEO, your company and the PEO become co-employers of your international employees. This means that while you retain control over day-to-day operations and management of your employees, the PEO handles HR functions such as payroll, benefits, compliance, and risk management.
- PEOs often offer a broader range of services beyond international employment, including HR consulting, employee training, and regulatory compliance assistance. They are commonly used by businesses seeking to outsource their HR functions and reduce administrative overhead, both domestically and internationally.
In summary, the main difference between EOR and PEO lies in the legal relationship with employees. EOR acts as the legal employer, while PEO operates as a co-employer alongside the client company. Both options provide valuable support for global expansion, but the choice between them depends on factors such as legal requirements, operational preferences, and the level of control desired by the business.
